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Adjusting To The New Reality In Oil Markets

Adjusting To The New Reality In Oil Markets

Oil markets rebounded strongly over…

Nigeria’s NNPC Withholds Payments To Eni

Nigeria’s state oil firm on Wednesday said that it had stopped payments to Eni three months ago, according to Reuters, adding that it planned to let some of Eni’s oil licenses expire.

 NNPC has plans to take over some of Eni’s licenses for itself.

In the meantime, Nigeria’s refusal to pay Eni has created some setbacks for the country, which has taken steps to overhaul its energy industry by tamping down pipeline violators along with a series of anti-corruption efforts including improving transparency in the sector.

NNPC did not say which of Eni’s asset licenses would not be renewed, nor did it specify what asset the dispute was over.

“The failure to pay cash call arrears in the last three months was deliberate and meant to ensure that the issues surrounding the agreement (are) settled,” NNPC said in a statement carried by Reuters.

NNPC urged Eni in its statement to finish Phase 1 of the Port Harcourt refinery rehab project on time, which is in October.  Nigeria is making a push to boost its local refinery capacity.

Nigeria has had several bumps in the road when it comes to dealing with foreign oil investments in its country, ranging from corruption to security to back tax issues.

Eni, along with Shell, has been embroiled in a scandal over OPL 245 in Nigeria spanning years and continents, the likes of which have not yet been laid to rest. In February of this year, Nigeria ordered foreign oil companies to pay $20 billion in back taxes to local states. Security issues have also been a concern for foreign players, although Nigeria seems to be making progress on this front, at least from the days when the Niger Delta Avengers were intent on disrupting Nigeria’s oil industry.

By Julianne Geiger for Oilprice.com

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